A New York Times story manages to bury the lead, even given the salacious material, in an important story that provides more evidence of the overly-cozy relationship between the New York Fed and its favored large banks, particularly Goldman. The issue is sensitive in the wake of former New York Fed staffer Carmen Segarra releasing hours of tape recordings that show undue deference by the Fed employees towards Goldman....What is striking about the New York Times expose is how tortuous the writing is, and how it takes (and I am not exaggerating) three times as many words as necessary to finally describe what happened. For instance, it isn't until the 9th paragraph that the article mentions that this sharing of confidential information can be a crime and the authorities are giving a serious look into that very question.

The overview: a former New York Fed employee who had been assigned to work with banks obtained confidential information about a bank client that amounted to impermissible sharing of privileged regulatory information. As the Times states at the very end of the story:

Goldman determined that the spreadsheet contained confidential bank supervisory information. Federal and state rules classify certain records, including those generated during bank exams, as confidential. Unless the Federal Reserve provides special approval, it can be a federal crime to share them outside the Fed.

But proving that someone "willfully" violated the rules, as is required for a criminal prosecution, could be difficult. The rules are vague and even contradictory about which documents must remain confidential -- and when regulators are allowed to share them.

Some of [Goldman employee] Mr. [Rohit] Bansal's information, the lawyers said, may have come from Jason Gross, who worked at the New York Fed at the time.

Mr. Gross's lawyer, Bruce Barket, said, "We are cooperating with the federal investigation to the best we can."

They put the worst nine paragraphs down, beneath the copy from three reporters, apparently hoping that few readers will get that far. At least they published the story. It gets better.

It would seem time to change the status of The New York Federal Reserve Bank by abolishing it board and making it directly responsible to the Federal Reserve Board of Governors and the Chairman. That would obviate the possibility for Jamie Dimon or another powerful Wall Street Banker to have an inside position as a member of the New York Fed's board. Most Open Market Operations by the Fed are implemented by the NY Fed. Determing what to do about the New York Times and other MSM publications is more difficult.